06 March 2011

High import duties on pre-packed tea to the Russian Federation has compelled a young, Sri Lankan value-added tea exporter to relocate his packing operations to Russia (from Colombo), 12 years ago at an initial investment of Rs. 9 billion.

In an interview, Riston Chairman Nishantha Perera told the Business Times that, “today, my company Riston Tea Group maintains two modern tea packing, blending and production plants in Moscow region with an up-to-date warehouse complex”.

Its work force is around 450, all of them are Russians, he said. Riston Tea will go for a massive brand promotion campaign to the value of $8 million this year, he revealed.

“Riston’s trade mark is present in federal and local shopping networks in the Russian Federation with wide accessibility in stores and market places due to the company’s efficient marketing staff and its sales campaign with high logistics and technology,” he added. Mr Perera revealed that plans are underway to set up another plant this year.

The group’s total turnover exceeds Rs.3.3 billion. It also has a factory in Peliyagoda, employing 40 people, with a capacity to ship 20-30, 40-foot containers of tea a month and goes by the name UK Beverages (Pvt) Ltd, which is the Sri Lankan counterpart servicing the Riston brand as the supplier of Ceylon tea.

Mr Perera lives and operates companies in Russia as well as in Sri Lanka. The local company has all the infra structure including a tea bagging and packing plant, warehousing and an experienced team of personnel to handle the local end of the supply chain for the Riston brand.

Riston is listed in the top five brands of tea in Russia, Mr. Perera said. The company is now targeting other countries outside Russia like North America, Israel and Czech Republic for tea exports. Riston operates its own distribution channels and owns the distributor company, Premium Brands Ltd. In Russia, all these divisions of the Russian tea business are owned by Mr. Perera.

The company is also increasing manufacture of tea bags to cater to changing trends in Russia which is shifting to tea bags from loose tea. Mr. Perera attributed his achievement in Russia to focused brand building efforts and the operation of its own distribution network in that country.

The group has plans to grow the Rs. 9 billion investment to more than double that figure in the medium term, he said. According to AC Nielson, a global marketing research firm; Riston is ahead in terms of markets shares with 6.4% value share in the modern trade analysis of 24 cities, over and above all other Sri Lankan-owned brands being sold in the Russian market.

Mr. Perera noted that “despite having to pay more for the Russian employees the economic benefits and other competitive advantages of doing tea bag packaging in Russia are greater,”

Riston plans to achieve a target of selling 4.3 million kilos of tea in Russia in 2011, up from sales of 3.8 million kilos in 2010. The company sold teas worth $67 million in 2010 in Russia and aims to increase sales to $80 million in 2011, Mr. Perera said.

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